Re: Protective Actions Against Trademark Infringement And Passing Off In PRC

The PRC General Principles of Civil Code (effective on 1 January 1987) provides a general provision on trademark infringement. According to Article 118 of the General Principles, trademark owners whose rights have been infringed by plagiarism, alteration or imitation, may demand that the infringement be stopped, its ill effects be eliminated and damages be paid.

2. The PRC Trademark Law and its Implementing Regulations

The PRC Trademark Law (Revised) (effective on 1 December 2001) explains the elements of trademark infringement. Article 52 of the Law states the following acts constitute an infringement of a registered trademark :-

1. to use a trademark that is identical with or similar to a registered trademark in respect of identical or similar goods without the authorization from the trademark registrant;
2. to sell goods that are in infringement of the exclusive right to use a registered trademark;
3. to counterfeit, or to make, without authorization, representations of a registered trademark of another person, or to sell such representations of a registered trademark that were counterfeited, or made without authorization;
4. to change, without the consent of the trademark registrant, a registered trademark and market the goods bearing the changed trademark; or
5. to cause, in other respects, prejudice to the exclusive right of another person to use a registered trademark.

Articles 50 of the Implementing Regulations of the PRC Trademark Law (Revised) (effective on 15 September 2002) further explains that the term "other harm" in Article 52(2) of the Trademark Law includes :-

1. use as the name or trade dress of goods, of a sign which is the same as or similar to a third party's registered trademark for the same or similar goods, thereby misleading the public; or
2. intentionally providing conditions that facilitate the infringement of a third person's exclusive right to use a trademark such as by storing, transporting mailing or concealing infringing goods.

3. The PRC Anti-unfair Competition Law

The PRC Anti-unfair Competition Law (effective on 1 December 1993) provides protection against acts of counterfeiting of registered trademarks and unregistered trademarks. Article 5 of the Law stipulates that managers should not use the following unfair methods in their business transactions which can damage other competitors :-

1. to feign the others' registered trade mark;
2. to use the specific name, package, decoration of famous or noted commodities, or use a similar name, package, decoration of the famous or noted commodities, and confusing consumers regarding the commodities and that of the famous or noted commodities;
3. to use the name of another enterprise or personal name and confuse its commodity to with that of the other's commodity;
4. to feign or pretend to be the certificate of attestation, mark of fame or high qualification, to feign the certificate of originally produced place of the commodities, and make others misunderstand the qualification of the commodities because of the false certificates.

The pre-requisite for an unregistered trademark to seek protection under the PRC Anti-unfair Competition Laws is that the trademark shall be recognized as a "well known" trademark in PRC. The People's court can make its own ruling to recognize a mark as a well-known trademark if there is sufficient evidence supporting that finding. Therefore, pre-registration for well-known trademarks is not compulsory. Whether a trademark is "well-known" depends on a number of factors in relation to the use and promotion of the mark in PRC, such as sales volume, promotion expenditures, extent of promotion, extent of public recognition in PRC etc.

The Product Quality Law (Revised) (effective on 1 September 2000) also provides provisions regarding trademark infringement. Article 5 of the Law prohibits forgery or false use of authentication marks, famous-and-excellent-product marks or other product quality marks; prohibits forgery of the origin of a product, forgery or false use of the name and address of a factory of another producers; and prohibits mixing impurities or imitations into products that are produced or sold, or passing off a fake product as a genuine one, or passing off a defective product as a high-quality one.

5. The PRC Criminal Code

In PRC, counterfeiting of registered trademarks may constitute a crime. Articles 213 to 215 of the PRC Criminal Code (Revised) (effective on 1 October 1997) provide that the following acts may be prosecuted : -

1. the unauthorized use of a mark identical to a registered trademark on the same type of goods;
2. the sale of goods with the knowledge that they bear a counterfeit registered trademark; and
3. the unauthorized forgery or manufacture of representation of a registered trademark of a third person, or the sale of representation of a registered trademark that has been forged or manufactured without authorization.

Possible punishments are imprisonment and monetary penalty.

The following actions are available to trademark owners in case of trademark infringement or passing off : -

1. Court Action

A lawsuit for infringement or passing off of a trademark may be filed with the PRC court. The court has a right to make an order to award damages to the injured parties. Besides, in a trademark infringement case, the court can make an order to stop the infringing acts and to preserve property prior to proceedings if the registered trademark owner can satisfy the court that unless the infringing acts are stopped immediately, he would suffer irreparable damage.  

(a) Administrations For Industry and Commerce ("AIC")

A registered trademark owner can file an application with the AIC at county level or higher to enforce his trademark rights by administrative action. If the application is deemed tenable, the AIC will conduct a raid as soon as possible. The AIC may impose the following remedies if it determines that an infringement has taken place after investigation :-

1. order the infringer to immediately cease the infringing acts;
2. confiscate and destroy the tools of infringement and the tools used to manufacture the infringer's goods or forge the representations of the trademark in question;
3. a fine on the infringer.

AICs at a higher than county level may take actions against passing off of trade marks of another person.

(b) Technical Supervision Bureau ("TSB")

A registered trademark owner may choose to take action to enforce his trademark right through the TSB which is concerned with quality issues and which can be extended to correct packaging and labeling, including required details of name and address of manufacturer on products produced in PRC under the PRC Product Quality Law. TSB has many of the inspection and seizure power of the AIC including seizure of illegal products and punishing the infringers with a fine.

TSBs at a higher than county level may take actions against passing off of trade marks of another person.

(c) Custom Authorities

Registered trademark owners may request customs to seize suspected infringing goods at the point of import or export from PRC.

Generally, administrative actions are less expensive and time consuming, but there will be no compensation for damages through administrative actions. Therefore, the administrative actions may be a good choice only for minor trademark infringements, or the goal of the action is to stop the infringement only.

An unregistered trademark owners can only take action against the passing off of their trademarks in PRC if they can establish that their trademarks are "well-known". Registered trademark owners can however base their action on the relevant trademark registrations without the burden of proving the reputation of their trademarks in PRC. It is therefore advisable in order to ensure better protection and enable actions be taken against infringers effectively and speedily that all trademark owners register their marks in PRC.

Experienced lawyers in our Intellectual Property regularly advise clients on intellectual property enforcement or registration in PRC, Hong Kong and elsewhere. If you have any question on the above article, please do not hesitate to contact us.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.